Charles Schwab and Co. revolutionized the brokerage industry when they opened their doors in 1975, allowing middle-class Americans to buy stocks with sharply lower commissions than those charged by Wall Street investment houses. E*TRADE had an equally disruptive impact in the 1990s, as the first broker to offer low-cost online trading that eliminated phone calls or car trips to a local branch.
E*TRADE had little in common with Schwab when the electronic brokerage opened for business at CompuServe and America Online but that’s changed considerably in the last 25 years, with customers at both operations accessing a broad basket of services that range from day trading and short selling to long-term investment and retirement planning. However, key differences remain and it's best to compare offerings and the fine print before funding an account.
In our 2019 Best Online Brokers Awards, Charles Schwab received awards for Best Overall Online Brokers, Best for Beginners, Best Stock Trading Apps, Best for ETFs, Best for Options Trading, Best for Penny Stocks, Best for Roth IRAs, Best for IRAs, Best for International Trading, and Best Web Trading Platforms.
On November 25, 2019, Charles Schwab announced a buyout of TD Ameritrade’s online brokerage. The transaction itself is expected to close in the second half of 2020, and in the meantime, the two firms will operate autonomously. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.
E*TRADE received awards for Best for Beginners, Best Stock Trading Apps, Best for ETFs, Best for Options Trading, Best for Roth IRAs, Best for IRAs, and Best Web Trading Platforms.
- Account Minimum: $0
- Fees: Free stock, ETF and options trading commissions in the U.S., as of October 7th, 2019. $0.65 per options contract.
- Account Minimum: $0
- Fees: No commission for stock/ETF trades. Options are $0.50-$0.65 per contract, depending on trading volume.
Both brokers provide comprehensive trading and investment services through the web, standalone software and mobile apps. There are no maintenance fees and $2,000 is needed to open margin accounts. A cash (non-margin) account can be opened at Schwab for $0.00 and E*TRADE for $0.00. The Power E*TRADE standalone platform features fully-integrated trading of stocks, options, ETFs and futures, as well as pro-level idea generation tools and advanced intraday and historical charting, with more than 100 studies, drawing tools and chart types. Schwab customers can trade stocks, options and ETFs, but no futures contracts, with the StreetSmart Edge platform. Both standalone and web versions include tools to identify potential trading opportunities, advanced technical analysis charting, streaming financial TV, real-time news and broad customization.
- Intuitive interface that's ideal for casual investors
- Range of research tools consolidated into one place
- StreetSmart Edge standalone and web platforms
- Powerful mobile and desktop experience
- Intuitive portfolio management
- Easily navigate between investment options
Mobile and Emerging Tech
Both brokers provide robust mobile apps and state-of-the-art robo-advisory services. Schwab's no-fee Intelligent Portfolio offers automated advice for a $5,000 minimum commitment. It also takes $5000 to join E*TRADE's Core Portfolio program, which gives automated advice for a 0.30% annual advisory fee. Mobile apps for iOS and Android at both brokers provide breaking news, intuitive order entry, real-time data and built-in research functionality.
- In app research
- No-fee robo-advisor
- Mobile deposit for checks
- Mobile app easy to navigate
- Low fee robo-advisor
- Bloomberg TV integrated into mobile apps
News and Research
Schwab StreetSmart Edge software includes fundamental research with real-time news, company earnings, dividends, ratings and short interest. The web-based Insights & Ideas provides daily market updates, workshops, white papers and expert picks, as well as separate menus for retirement planning, personal finance, portfolio management, sector views and fixed income. Power E*TRADE includes basic research and Morningstar ratings as well as performance data and headline news. Account holders can also review TipRanks recommendations and access a suite of planning tools. Platforms at both brokers provide a diverse set of advanced technical analysis charting tools.
- Product screeners
- Analyst ratings and reports
- 100s of Indicators and studies
- Planning tools and calculators
- Technical analysis charting tools
- TipRanks recommendations
Education and Security
Schwab offers basic education on products and investments as well as in-person workshops. The monthly On Investing magazine covers general investment topics, with an emphasis on retirement, income protection and financial planning. E*TRADE also offers in-person events, supplemented by real-time webinars and a diverse selection of video content.
Both companies are regulated by FINRA and SIPC and carry federal deposit insurance plus additional third-party insurance coverage in case anything goes awry.
- In-person workshops
- Strong emphasis on retirement and financial planning
- Additional third party insurance coverage
- Webinars and in-person events
- Diverse selection of videos
- Additional third party insurance coverage
Schwab eliminated its base commissions for stock and ETF transactions as well as its per-leg fee for options trades. Commissions are also eliminated for OTCBB (penny stock) transactions, which is a differentiator. Options trades are now $0.65 per contract, which is a large price cut for smaller multi-leg trades. Schwab offers no direct forex coverage but clients can trade currency futures contracts. Their margin rates are average and lower than E*TRADE's.
E*TRADE also eliminated its base trading commissions on equities, ETFs, and options in the U.S. Options trading is $0.65 per contract, though customers who trade more than 30 times per quarter, or who have more than $250,000 in their accounts are eligible for $0.50/contract commissions. Margin interest rates are near the top of the brokers we surveyed.
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.
In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.